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Reclassification to IC bumps employee’s pay from $113,000 per year to nearly $1.4 million

An employee convinced the Beverly Hills Unified School District to reclassify her as an independent contractor in 2006. Court records say the move resulted in the amount paid to the worker going from a salary of $113,000 to payments that amounted to nearly $1.4 million. In 2008, the independent contractor persuaded the district to award her a no-bid $16 million contract.

On Aug. 13, 2009, after an internal investigation, the district terminated the contract. On Aug. 28, 2009, the worker, Karen Christiansen, sued the school district claiming the agreement did not violate the law and the district breached its contract with her firm Strategic Concepts LLC, according to court records.

Christiansen won the jury trial and was awarded a total judgment of $20.3 million. A reasoning in the trial court was that Christiansen was an independent contractor, not an employee subject to state law, Section 1090, prohibiting conflict of interest for government employees.

However, the Second District Court of Appeal in Los Angeles ruled last Thursday the trial court erred and that Christiansen was still covered under Section 1090 even though she was an independent contractor.

The full opinion is online [1], but here are some of the facts in this case, according to the opinion:

“Christiansen used her position of trust as an employee to ingratiate herself with the district’s administrators,” according to the Court of Appeals’ decision. “She ‘lobbied hard’ to move from an employee to independent contractor. As a result, she entered into a contract that transformed her from an employee earning $113,000 per year to an independent contractor earning over $1.3 million per year, doing the same work from the same office in the district’s headquarters. Then she used her influence with the district to obtain a $16 million no-bid contract to administer the district’s new bond fund. Using a position of public trust or influence to obtain such contracts is a clear violation of section 1090.”